REC cuts size of FCCB issue

Rural Electrification Corporation (REC), which initially planned to raise $1 billion through foreign currency convertible bonds (FCCBs), would now be able to raise only $500 million to maintain the government shareholding at 60 per cent or more.

“Now, the size of the FCCB issue would be between $500 million and $600 million, as the government is keen on holding at least 60 per cent equity in the company,” H D Khunteta, finance director, told Business Standard. If the size of the issue is kept at $1 billion, the government’s 66.8 per cent stake in the company would fall to 56 per cent.

However, despite the sizing down of the issue, the company is yet to secure the government’s approval for FCCBs. “Approval for the issue is going to take another four months or so,” Khunteta said. The company is also looking to raise up to Rs 1,500 crore through corporate bonds in the second week of January. “We are looking to raise Rs 1,000- Rs 1,500 crore and would be opening the issue between January 9 and January 10,” Khunteta said.

REC has also revived a plan to raise $200 million through Swiss bonds, Khunteta said. He added the company’s plan to raise $250 million through syndicated loans in February was not deferred.